QUESTION: With the country dealing with the deadly COVID-19 pandemic, why is the housing market thriving?
ANSWER: Even with the deadliest pandemic to hit the country in more than a century, the housing market has thrived due to the lowest mortgage rates ever recorded combined with a shift in how people are using their homes.
The number one reason people sought to purchase homes was due to the low interest rates, but as people are working from home more, they seek bigger homes and care less about commuting times. They see their homes not only as a place to live but an office and, for those with children, a part-time school. People are also seeking homes with pools and home gyms since they’re spending so much time at home.
In a recent interview with HousingWire, Lawrence Yun, chief economist of the National Association of Realtors (NAR), said that during the first few months of the pandemic, he projected home sales in 2020 would experience a 15% decline. Once the Federal Reserve announced it would buy Mortgage Bonds to keep the credit afloat during the pandemic, the average U.S. rate for a 30-year fixed mortgage has fallen below 3% in the latest survey from Freddie Mac.
As a result, the NAR announced that existing-home sales jumped nearly 27% annually in October to a seasonally adjusted annual pace of 6.85 million units. This was the highest sales pace in 16 years. “The surge in sales in recent months has now offset the spring market losses,” he said. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” Yun forecasts existing-home sales to rise by 10% to 6 million in 2021.
Sources: Vanity Fair, Housing Wire
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